"What happens in Vegas"... Will likely end up on this site. Sorry, Las Vegas Chamber.

Monday, January 7, 2013

The New (Old) Rule of the 113th Congress

Shortly after the "Fiscal Cliff" deal was announced, there was talk of how much "leverage" Republicans gained going into (the next round of) debt ceiling & budget talks. After all, Republicans made sure not to deal with the debt ceiling last week. Don't they now have the upper hand in the budget fight?

Not so fast. But before I explain this further, I must mention something else (that's actually related in a funny way).

Also last week, Harry Reid became the longest serving Nevadan in Congress. He's already been the most powerful Nevadan in Congress, but now he has another notch to add to his victory belt. Ralston didn't miss this as he paid tribute last week.

MSNBC's Lawrence O'Donnell followed suit, and he specifically added a little known fact (that is, little known to folks who don't read this blog ;-) ) about what Harry Reid accomplishes daily in the US Senate.

“Harry Reid, who every day does much more than most people in the news media realize, and definitely accomplishes much more than the news media ever reports, pushed through pages and pages of nominations for President Obama yesterday when everyone was focused on what the House would do on the fiscal cliff vote. And Harry Reid did that with the active but invisible help of Mitch McConnell who did his part to make sure that no Republicans would vote against any of those nominations. And what did the United States Senate do today, that dysfunctional United States Senate? According to the news media, absolutely nothing.”

Yet here in the real world, Harry Reid has accomplished quite a lot. Lately, he, President Obama, and Vice President Biden forced a majority of Senate Republicans (including Dean Heller) and a significant chunk of House Republicans (including Joe Heck) to vote to raise taxes on the super-wealthy. Just last year, that was considered impossible. But now, it's happened.

It’s true that [House Speaker John] Boehner insists above that Republicans won’t back down from the demand that spending get cut by the same amount as the debt ceiling rises. But all that really means is that they will use the size of the debt ceiling hike as a metric to set the amount of their spending cut demand — not that the threat of default will be used to extract those cuts. Remember, GOP leaders well know that if they do that, the entire business community will join with Obama and Democrats to tell them to back off or take the blame for cratering the economy, leaving Republicans further isolated. So Boehner is letting it be known that Republicans don’t see the debt ceiling as their primary leverage point in the battle to come.

Boehner does this by threatening to only agree to “monthly” debt ceiling hikes. But this should be read, if anything, as a sign of weakness. It’s essentially a concession that the debt limit has to be raised; Boehner is merely threatening to drag his feet as he allows the inevitable to happen. But it’s just nonsense. The business community is not going to go for such a course of action, to put it mildly. And it risks dragging the country through monthly threats of default, a terrible thing to inflict on the American people.

Ultimately, what this highlights is the utter incoherence of the GOP position on the debt ceiling. Republican leaders know they have to raise the debt limit — they know the threat not to do this isn’t credible, and they need to signal to the business community that they don’t view this option seriously — yet they want to continue to use it as leverage to get what they want, anyway. Hence Boehner’s above dance. And Boehner isn’t the only one: On Face the Nation yesterday, when [Senate Minority Leader] Mitch McConnell was asked directly whether Republicans would really withhold support for a debt ceiling hike if it weren’t paid for by spending cuts of equivalent size, he repeatedly refused to answer.

Boehner’s and McConnell’s equivocations will only embolden the White House and Democrats to stick with their strategy of refusing to negotiate over the debt ceiling, and treating the Republicans’ refusal to commit to raising it up front as their problem, and their problem only.

No matter how much teabaggers whine and moan and shout and complain about the federal budget and the debt ceiling, the fact of the matter is that we have to pay for what we buy. And Wall Street knows this, which is why the Wall Street power players do NOT want another 2011 style melee in 2013... And they certainly do NOT want America to default on its debt. That would trigger a global financial panic at least as great as 2008's, and possibly as horrific as that in 1929.

President Obama and Harry Reid also know this. Do Republicans really want to trigger another Great Depression? And do they want Americans to unleash their wrath on the entire G-O-TEA? This is why Boehner and McConnell are starting to back-pedal on their demands for another debt ceiling showdown. Quite frankly, Republicans actually don't have the kind of "leverage" in the next round of budget talks that many Beltway pundits originally assumed they had.

One thing I had to learn after moving to Nevada is that Harry Reid is a much shrewder strategist than I had originally given him credit for. He's overcome the odds many times before in his political career. And now, on Capitol Hill, he's managed to pass legislation that many assumed was "dead". Just keep this in mind as we hear more about the upcoming debt ceiling/budget fight.